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G20 should ensure recovery fights poverty

Published:

10 November 2010

Too often in the past, the poorest have been denied the benefits of growth. The G20 needs to show that this time it will be different.

Takumo Yamada

Oxfam Policy Manager

World leaders have an historic opportunity to reform the global economy to ensure that the one in six people who live in extreme poverty benefit from economic recovery, international agency Oxfam said today ahead of the G20 summit in Seoul.

As the first non-G8 member to host a G20 heads of state summit, South Korea has made development a central part of its agenda with a focus on boosting poor countries’ growth. But Oxfam is concerned that progress towards tackling poverty could be derailed by rows over currency valuations and monetary policies.

Oxfam is calling on the G20 to forge a new Seoul Development Consensus to replace the failed Washington Consensus of the past. The new consensus should combine financial support for health, education and poor farmers in developing countries with action to make the global economy work in the interests of poor countries.

A narrow focus on growth would not be enough on its own to tackle poverty, the international agency warned. From 1981-2001, when the Washington Consensus was at its height, the world economy grew by $19 trillion but people living in extreme poverty received only 1.5 percent of that.

Takumo Yamada, Oxfam Policy Manager, said: “Too often in the past, the poorest have been denied the benefits of growth. The G20 needs to show that this time it will be different.

“Millions of people have been pushed into extreme poverty by the economic crisis and are facing cuts in already threadbare healthcare, education and social support.

“The G20 has the chance this week to make great progress in tackling poverty. It would be a tragedy if poor people became casualties of conflict over currencies.”

The World Bank estimates that the global slump has pushed 64 million more people into extreme poverty, forcing them to live off less than $1.25 a day. Research for Oxfam shows that 56 poor countries face a $65bn fiscal hole in their budgets as a result of the economic crisis.

Oxfam is pressing the G20 to agree a package of specific measures to help poor countries, including:

A tax on the major OECD financial centers to fund development. A financial transaction tax could raise $400bn per year

Rich countries to deliver on their aid promises. Investment in health, education and poor farmers is essential to economic development;

Action to curb speculation on commodity markets that has contributed to almost 1 billion people going hungry;

Regulation to protect poor people from the adverse effects of ‘land-grabs’ which have seen huge swathes of prime agricultural areas taken by foreigners;

A real say for poor countries in the global economic decisions that affect them – at least 3 full seats at the G20 and root and branch reform of the IMF.

Yamada said: “The G20 should learn from its own experience of what works. Korea’s recent success in economic development was achieved with the help of billions of dollars of aid which helped fund vital health and education, as well as land reform to ensure fair access for the poor.

“Rich countries must not use the economic crisis or the G20’s focus on growth to wriggle out of their commitments to the world’s poorest at a time when they need help more than ever.”

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